Pagcor pays BIR P857 million in back taxes

MANILA, Philippines - The Philippine Amusement and Gaming Corp. (Pagcor) settled last year almost P857 million in unpaid back taxes incurred by its previous management, officials said yesterday.

Pagcor chairman and chief executive officer Cristino Naguiat Jr. said a big chunk of these tax liabilities were incurred beginning 2004 until 2010 when the state-owned gaming firm was removed from the list of agencies that were exempted from paying corporate income tax.

Pagcor contested the constitutionality of the ruling, asserting that Pagcor under its charter is exempted from paying the said tax. However, the Supreme Court came out with a ruling last year rendering as constitutional the removal of Pagcor from the list of corporate income tax-exempt entities.

According to Naguiat, the Bureau of Internal Revenue agreed to accept P857 million last December as partial settlement of the agency’s tax liabilities.

“The amount is still subject to validation by BIR. There is still an ongoing audit investigation. We will not hesitate to pay the taxes due our government,” Naguiat said in a statement.

After the ruling, Naguiat said they immediately coordinated with the BIR for an audit of the back taxes that are supposed to be paid by the agency. To facilitate its tax settlement, Pagcor took the initiative of doing an initial computation of its tax obligations and submitted this to the BIR last December, he said.

“We talked to BIR Commissioner Kim Jacinto-Henares and informed her of our desire to voluntarily comply with Pagcor’s tax obligations by offering to settle P857 million in unpaid back taxes. This is our way of helping raise more funds for our government,” Naguiat said.

Pagcor is the third largest revenue-generating arm of the government next to the BIR and Bureau of Customs.

From January to November 2011, the agency generated gross revenues of P33.15 billion, P15.51 billion of which was allotted to large-scale socio-civic programs as Pagcor’s contributions to nation-building.

Of these contributions, P1.13 billion went to the BIR in the form of franchise tax, P10.71 billion to the National Treasury, P536 million to the Philippine Sports Commission, P453 million as share of Pagcor’s casino host-cities, P1.75 billion to the President’s Social Fund, P873 million as direct assistance for socio-civic projects, P40 million to the Board of Claims, and P14.37 million for special laws.

Naguiat said Pagcor continues to practice prudent management of its funds.

“We want to make sure that we will have sufficient savings which can serve as Pagcor’s buffer for exigent expenses and funding allocations. We were actually able to pay the P857 million back taxes to BIR using our savings,” he said.

He said Pagcor was also able to allocate P1 billion for its “Matuwid na Daan sa Silid-Aralan project” out of the huge savings generated from its high income realization and prudent spending this year. The said project intends to build 1,000 classrooms nationwide in time for the opening of classes for school year 2012-2013.

“We are committed to help our government in its campaign to move our country forward. This year, we intend to make Pagcor more active in our government’s various nation-building efforts by implementing high-impact Corporate Social Responsibility (CSR) projects. This is our way of saying we care and we will do our part in improving the lives of our countrymen,” Naguiat said.